Skip to main content

Pedestrians pass in front of HSBC Holdings Plc signage displayed near Bay Street in Toronto, Ontario, Canada, on Monday, Aug. 29, 2011. Bay Street is the center of Toronto's Financial District and is often used as a metaphor to refer to Canada's financial industry. Photographer: Brent Lewin/Bloomberg

Brent Lewin/Bloomberg

HSBC Bank Canada has decided to shut its consumer finance business, after trying unsuccessfully to shop the assets for the past several months.

The move will result in the layoffs of about 500 people at 75 offices across the country, as the Vancouver-based bank continues to restructure its Canadian operations and sell off assets.

The division, which lends through private-label credit cards issued by retailers, and underwrites non-prime loans for consumers, was put on the block in the fall, but failed to attract buyers.

Story continues below advertisement

Several financial players, including National Bank of Canada , Royal Bank of Canada and Onex Corp. are said to have taken a look at the assets in recent years, but passed on the sale.

HSBC Canada chief executive officer Lindsay Gordon said he was unhappy the bank couldn't find a buyer. Faced with unsatisfactory offers, HSBC has decided let the existing loans expire over the next few years, rather than sell the company for less than its value.

"I'm disappointed, to be quite frank, that we were unable to get a suitable offer – despite the fact that we spent considerable time and broadly canvassed the market," Mr. Gordon said Wednesday.

"Our first preference was to sell the consumer finance business … Having exhausted all available alternatives, the appropriate steps are now being taken to wind down the business."

The decision will have no impact on HSBC's other operations in Canada, Mr. Gordon said.

Several banks around the world have been looking to get out of businesses that involve riskier consumer lending, such as non-prime consumer loans and mortgages; and private-label credit cards, which carry higher interest rates than most bank-issued cards.

Such lending has become less attractive and more difficult to finance in the wake of the global financial crisis.

Story continues below advertisement

As well, new regulations in the banking sector require those assets to be backstopped by more capital which makes them less attractive to many potential buyers, Mr. Gordon said.

The attempted sale also came at a time when European banks are putting a variety of assets on the block in an attempt to raise capital, which made selling the business more difficult.

"This move, while not taken lightly, will allow HSBC to better focus our resources on the core businesses that matter most to our Canadian banking customers," he said.

HSBC Holdings PLC , the bank's parent company, shut similar operations in the U.S. and Europe over the past few years, but kept the Canadian operations running because the loans were rated higher and more profitable than those elsewhere, Mr. Gordon said.

The consumer lending division was acquired by HSBC Canada when the bank bought U.S. lender Household International for $14.2-billion in 2003. The division will continue to service and collect on existing loans however new loan applications will be halted.

HSBC Canada has been shedding assets over the past year in part of a global restructuring for HSBC that has also included thousands of layoffs around the world.

Story continues below advertisement

In September, HSBC Canada sold its retail brokerage to National Bank Financial Inc. for $206-million as part of the shakeup.

Despite the sale of what HSBC deems to be non-core assets, the bank will continue to focus in its primary commercial banking business in Canada, as well as its global operations.

"Canada is a key global market for HSBC," Mr. Gordon said. "Building on the solid base we have built over the last 30 years, we are continuing to make significant investments to grow HSBC Bank Canada's core businesses."

Report an error Editorial code of conduct Licensing Options
As of December 20, 2017, we have temporarily removed commenting from our articles. We hope to have this resolved by the end of January 2018. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to